More and more digital media companies want to go public. Can their newsrooms survive?

Many members of the BuzzFeed newsroom feel like they’ve been sold.

The digital media stalwart opened up to the stock market at the end of 2021, repositioning itself as a torchbearer for the rest of its startup peers. Vice, Vox and Bustle have all flirted with the idea of ​​public investment to varying degrees over the years, but BuzzFeed was among the first to take the plunge, clinging to a SPAC deal and selling its own shares for $10 at the opening bell.

It was to be the new model for an industry that is constantly on the hunt for financial salvation – yet another method of satiating creditors – but in retrospect, the writing may have been on the wall from the start. BuzzFeed CEO Jonah Peretti reportedly claimed the company would generate $520 million in revenue in 2021. In its first earnings call last month, that figure was reduced to $398 million. Today, a BuzzFeed share is trading at $5.18, about half of its original value.

You probably know the story by now. The morning before that earnings call, BuzzFeed management disclosed a sharp contraction in its Pulitzer-winning news service in an internal memo to employees. Three of BuzzFeed News’ top editors have resigned and about 35 employees are being offered voluntary buyouts. In total, BuzzFeed is looking to shed 1.7% of its workforce as the company appears to be reorienting itself around a single priority: revenue.

“Under Jonah’s leadership, the company has subsidized BuzzFeed News for many years,” read a particularly cruel quote, per The Daily Beast (emphasis mine). “[The] The next phase is for BuzzFeed News to accelerate the timeline for profitability and undergo a strategic shift so that we get there by the end of 2023.”

As the dust settled, it was increasingly clear how close BuzzFeed News could have been to a deathblow. CNBC reported that major shareholders have encouraged Peretti to clean up reporting staff entirely, to maximize revenue through attrition — ostensibly returning BuzzFeed to the viral-restricted content store it was more than a decade ago. BuzzFeed News was established in 2011 and has given the site an inordinate dose of prestige journalistic credibility, regularly taking the site’s reputation away from Harry Potter quizzes, for example by publishing the Steele dossier or uncovering Kevin Spacey’s grooming allegations. The staff is only guilty of doing their job.

“Investors can’t force me to cut the news, and the union can’t force me to subsidize the news. I am attached to the news in general and [BuzzFeed News] especially. I decided I wanted News to be profitable and ultimately profitable,” Peretti wrote in an internal email to BuzzFeed staffers reviewed by Nieman Lab. “We will not put profits ahead of quality journalism and I will never expect [BuzzFeed News] be as profitable as our entertainment divisions. But we can’t keep losing money.

This is perhaps the most depressing part of the whole debacle: many of us had wondered if a massive injection of shareholder cash would be compatible with the prerogatives of a fleet of disengaged economics journalists. traffic cynical. So far, it seems, we had every right to be concerned.

“Jonah swore up and down that it wouldn’t hurt us, that it wouldn’t be the thing that put us in this place,” said a BuzzFeed News staffer who asked to remain anonymous for this story. . “Maybe those promises were true for a few months, but then the shareholders said they didn’t want to spend the money on the news.”

BuzzFeed News employees will likely remain in a state of paranoia until the other shoe drops. Peretti may have staved off the vultures this time around with a few management reshuffles, overhead cuts and promises to double down on profit maxims, but who knows what will happen on the next earnings call? “[There’s] concern about how much pressure our CEO is willing to take before giving in and completely crushing us, which is a crazy way to operate in the first place,” another BuzzFeed News employee said. Peretti addressed those anxieties in the same internal email.

“Hopefully we won’t have to start over again, and it’s because of the shift in approach we started this week,” he wrote, in response to a question about whether staff can expect more layoffs in the future. “For many years News received more support than any other content division and over the years was allowed to spend 9 figures more than it generated in revenue. I always support News and I enjoy news, and I don’t want to have to cut news when we make new investments in other divisions. That’s why I want to turn News into a sustainable business, while continuing to do impactful and important journalism. I know this is a big change and will require us to operate differently. We will set News up for success so that News can become a bigger financial contributor to the whole of BuzzFeed, Inc.’s business.

If the last 20 years of layoffs, pivots and seizures have taught us anything, it’s that running a sustainable and conscientious news organization without the presence of strong shareholders is already extremely difficult. So as the specter of the stock market looms, as more and more digital media outlets head towards a SPAC or an IPO, as we see how quickly BuzzFeed News has been spun off, these rooms of board need to start asking the hard questions. Do the desires of the Wall Street class align with the priorities of good news? Do they even know what good news reporting is in the first place?

“I don’t know how to convince a person that information has inherent value, but it’s the truth. It’s a crucial good in the world that protects democracy, and people’s health and well-being,” a BuzzFeed News employee said. “It’s so valuable that you won’t always see money coming from it. But if you’re in this business, you have to decide that you want to to be in this business. You have to commit to it. »

That is of course the problem. Mega-rich rarely invest in assets because of a belief in their social cause. The goal, most of the time, is to grow and extract, even when the fastest way to grow is to reduce a company’s overhead. Mark Stenberg, who covers journalism business for AdWeek, isn’t sure how many exit avenues were available to the ascendant digital media companies of the early 2010s. massive amounts of seed money from various well-heeled investors, and that bill eventually arrives. Yes, enthusiasm for NASDAQ-listed newsrooms has waned since 2020, when it seemed like those public listings were imminent, but Stenberg asked me to consider the mindset of CEOs who spent years promoting their lucrative projections to a legion of wealthy partners and now find themselves running out of leads. From this point of view, a public offer seems obligatory.

“In a sense, ownership has made investors assume that one day those investors will get that money back. From an organizational perspective, that doesn’t seem like a decision. If they take the money, they have go public,” Stenberg said. “But if you’re a journalist and you’ve seen how negatively this has affected BuzzFeed, maybe it affects where you decide to go to work.”

Stenberg hints at an eventuality that could stem the tide. Members of the media around the world are aware of the carnage caused by BuzzFeed’s SPAC, and the outrage will only grow if Peretti and his investment team implement some of the most drastic cost-cutting options to grease falling stocks. There is growing disbelief among working people that a financial ambition built around exponential, unfettered growth will ever merge with the reasons people want to work in the media – a precept perhaps best embodied by the renaissance. from Deadspin in Defector, an employee-owned co-op built around the idea that they will never be asked to sell themselves to enrich someone else.

“I don’t think it’s inherently wrong for a media company to want to evolve and grow, nor do I think it’s a business model incompatible with producing good journalism,” said Tom Ley, editor of Defector. “The problem is in Why such scale and growth is pursued. If the idea is to build a big media company and make a ton of money to employ a lot of journalists and produce a lot of good work, then scale up. But if the idea is to build a big media company and make a ton of money just so a few big investors can eventually hit the eject button and walk out of there with a good rate of return, that’s at which point you are going to encounter an incompatible arrangement between the company itself and the people who want to do good work for the company.

Stenberg thinks the old philosophy could start to infect other, more profit-driven companies trying to recruit new talent. A good retention tool is to promise that one’s position will not be considered disposable by a cabal of obscure investors. At the end of the day, most journalists want to write stories without feeling like they’re constantly being watched for their financial efficiency. Should it be so hard to commit?

“I wonder if companies might start saying, ‘Hey, we’re not planning on going public, so you’ll never feel like you’re under that pressure.’ heyday of venture capital-backed media of a decade ago, where people were saying, ‘If we go public, we can make all this money,'” Stenberg said. “I think that conversation leads to a world where going public is more rarely a good idea for a news organization. It’s really hard to grow every quarter, especially for the news industry. And you see how that shows up at BuzzFeed when they say, “Cut the unprofitable part.”

For what it’s worth, BuzzFeed News employees benefit from a strong union that was forged before the company’s NASDAQ era. They ratified a contract after more than two years of negotiations. It doesn’t guarantee them immunity from greedy shareholders, at least not yet, but hey, leverage is leverage. If the slow shift towards stock finance in digital media is inevitable, at least the workers under the gun are finding their voice at the right time. Hope this message spreads in the industry.

“I absolutely think other unions should talk about what going public would mean for them and the future of their newsrooms,” a staffer at BuzzFeed News said. “So far, that doesn’t bode well for us.”

Photo from BuzzFeed News in New York in 2015 by Anthony Quintano used under a Creative Commons license.

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